Construction is one of the fastest growing industries in the United States.
Demand for skilled construction workers is evident across the country, with the industry now fully recovered from the Great Recession. However, approximately one-third of all construction workers across the nation are over the age of 50. Young workers are not entering the construction workforce as fast as those who are leaving, resulting in a deficit in the “replacement rate.”
Let’s take the case study of Alabama.
Alabama is not immune to the need for high-skilled workers.
The average age of construction workers is 47 years old in Alabama. One person completes an apprenticeship program for every four people who leave (separate and retire) the industry in the state. In 2010, Alabama’s construction industry launched a campaign to combat the state’s shortage of skilled workers. The campaign informed young Alabamians about the trades; high school students were encouraged to join vocational school or apprenticeship programs if they were not interested in attending a college or university. Unfortunately, the initiative was not particularly effective, because Alabama continues to have a shortage of skilled workers in 2017.
Construction firms increasingly are demanding high levels of skill and productivity from their new hires. The Associated General Contractors (AGC) of America completed a survey of Alabama’s construction contractors on the industry’s prospects for 2017. 71 percent of respondent contractors said they believed it will become harder or continue to be hard to find qualified construction professionals over the next 12 months. 55 percent of respondents said that worker shortages were the biggest issue facing their business. Furthermore, 42 percent of respondents said inexperienced skilled labor was a major challenge in regard to the safety and health of workers.
Should Missouri become more like Alabama, or the other way around?
Construction workers in states with prevailing wage laws tend to earn higher wages. Alabama discontinued its prevailing wage rates in 1980. As a result, Alabama construction workers earn lower wages than their counterparts in nearby states like Missouri. Alabama construction laborers earn an average hourly wage of $13.20. Construction laborers in Missouri, which currently has a strong state prevailing wage law, earn an average hourly wage of $19.86. For comparison, construction laborers in neighboring Tennessee, which has a weak prevailing wage law, earn an average hourly wage of $14.03.
Higher wages and benefits packages increase worker retention and recruitment of skilled workers.
While Alabama contractors are demanding more skilled construction workers, the industry is producing an inadequate supply of registered apprentices. Alabama had 3,934 registered apprentices in FY2015 and a total of 83,800 construction workers in December 2015. Registered apprentices comprised 4.7% of the construction workforce in Alabama, while Missouri’s apprentices comprised 7.3% of the construction workforce – 2.2 percentage points higher than Alabama.
The data indicates that Missouri contractors invest more in worker training than contractors in Alabama. This is mainly due to prevailing wage standards currently in place in Missouri and the higher rates of unionization among blue-collar construction tradesmen and tradeswomen in Missouri compared to Alabama.
America’s future depends on taking the high road.
To foster a high-skilled construction workforce, Alabama should take steps to expand registered apprenticeship programs. A “high-road” approach that could be taken is for the state to support worker organizing, encourage the payment of fair share fees to trades unions, or enact a prevailing wage law. Each of these policy changes indirectly increases enrollment in– and private funding for– apprenticeship programs without expending additional taxpayer dollars.
Conversely, Missouri should avoid becoming more like Alabama. Instead, the state should work to strengthen, rather than repeal, its high-road construction standards. Missouri could also improve on initiatives to encourage apprenticeship programs or vocational school for high school graduates who are not looking to attend a college or university.
The United States needs skilled labor. If state legislators take “high-road” actions to bolster training programs, the private marketplace can meet the demand for skilled workers in the construction industry.
Midwest Economic Policy Institute 